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The following table shows
my trading results compared to the three benchmark indices: the Standard and Poors
500 Index, Nasdaq composite, and Dow Jones industrial average. I do not trade or
manage money for others, just for my own account.
|
Year |
My Gain |
S&P500 |
Nasdaq |
DJIA |
|
2000 |
14.8% |
-10.1% |
-39.3% |
-6.2% |
|
2001 |
18.7% |
-13.0% |
-21.1% |
-7.1% |
|
2002 |
9.0% |
-23.4% |
-31.5% |
-16.8% |
|
2003 |
13.5% |
28.69%* |
50.0% |
28.28%* |
|
2004 |
29.1% |
10.88%* |
8.6% |
5.31%* |
|
2005 |
15.4% |
4.91%* |
1.4% |
1.72%* |
|
2006 |
22.2% |
13.6% |
9.5% |
16.3% |
|
# Avg |
17.5% |
1.7% |
-3.2% |
3.1% |
|
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Notes
# Avg: This is a simple average of the numbers listed in the table.
Green
appears for years in which I beat the index, red for
negative years, and white otherwise. The indices measure
the change in value from the close on the
last trading day in each year and do not include dividends or interest unless an
asterisk (*) appears. Those are total returns for the indices as reported by the
Wall Street Journal. My gains are marked to market, meaning they contain
both realized and unrealized gains or losses for the calendar year and include
dividends and interest paid
on my portfolio throughout the year.
Analysis
The bear market years of
2000 to 2002 show as red in the indices, but I was able to make a tidy profit in
those years. The indices beat me in 2003
and achieved stunning gains. I traded little that year (7 round trip trades) and
what I owned did not appreciate as much as
hoped. The following year, 2004, I made a massive 29% when I decided to take
trading more seriously. In 2005, I made two more
trades than in 2004. However, each trade appreciated more in 2004 than in 2005.
Dividends and interest helped more in 2005.
2006This was an unusual year for my
portfolio. In June I found the markets too choppy to trade so I withdrew into cash
and kept a close eye on my long term holdings, like utility stocks and
Michaels Stores. Rumors circulated that Michaels
was going to be bought out in the 40s. So I pushed most of my chips
into the pot on this one stock and did not see any compelling stocks to buy with
what little remained of my cash.
MIK was bought out at 44 on Halloween, closing out my position that I entered at
a split-adjusted price of 88 cents in 1990. Once I cashed out, I had funds to buy
many potential candidates, which I did, starting in November. The result of the
buyout and the soaring of my utility holdings and other stocks blended to
create a good year that again beat the indices.
|
Year |
Wins/
Losses |
Profit/
Loss |
Round Trips |
Hold Time |
My Gain |
|
2000 |
40% |
$1.66 |
41 |
120
days |
14.8% |
|
2001 |
61% |
$5.29 |
14 |
41
days |
18.7% |
|
2002 |
38% |
$1.52 |
23 |
51
days |
9.0% |
|
2003 |
73% |
$12.38 |
7 |
25
days |
13.5% |
|
2004 |
58% |
$3.68 |
39 |
29
days |
29.1% |
|
2005 |
55% |
$2.76 |
41 |
30
days |
15.4% |
|
2006 |
67% |
$6.89
|
31
|
61 days
|
22.2%
|
|
Avg |
56% |
$4.88 |
28 |
51
days |
17.5% |
Notes
The wins/losses column is
a count of the winners divided by a count of the winners and losers (that is, all
trades), including open positions at year end. The profit/loss column shows
for every dollar lost how much I gained, marked to market. For example, in 2001 for
every dollar lost I made $5.29. The round
trips show the number of trades I made during the year and do not include open
positions held open at year end. A round trip is
a buy and a sale. The hold time is the average for all positions bought and sold
within the same year. My gain is the same
as in the prior table and I show it here for reference. The avg line is a simple
average of the above numbers.
Analysis
In the bear market years
of 2000 and 2002, I lost more often than I won and yet still made money. How? I
kept my losses small and let my winners run
while collecting dividends and interest on my cash. I am impressed by the $4.55
profit/loss number. For every dollar
I lost, I made nearly $5 and earned an average of 16.8% even though three years
included a bear market. And I did it all without
going short, without using leverage, and trading only stocks.
2006
In 2006, I traded less than the prior year, held twice as long, found more winners,
and made more money than in 2005. I did not short nor
use leverage on my stock trades. I did use options this year. One was a covered call
and 3 were calls.
In 2 of those trades I made a small amount of money and two I lost a small amount,
ending with a net loss close to $0.
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